Correlation Between Morgan Stanley and GBX International

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and GBX International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and GBX International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and GBX International Group, you can compare the effects of market volatilities on Morgan Stanley and GBX International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of GBX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and GBX International.

Diversification Opportunities for Morgan Stanley and GBX International

0.67

Correlation Coefficient

Morgan Stanley  GBX International

Poor diversification

The 3 months correlation between Morgan and GBX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and GBX International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBX International and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Direct are associated (or correlated) with GBX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBX International has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and GBX International go up and down completely randomly.

Pair Corralation between Morgan Stanley and GBX International

Given the investment horizon of 90 days Morgan Stanley is expected to generate 161.46 times less return on investment than GBX International. But when comparing it to its historical volatility, Morgan Stanley Direct is 56.6 times less risky than GBX International. It trades about 0.03 of its potential returns per unit of risk. GBX International Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.90  in GBX International Group on September 23, 2024 and sell it today you would lose (6.88) from holding GBX International Group or give up 99.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	46.59%
Values	Daily Returns

Morgan Stanley Direct  vs.  GBX International Group

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GBX International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GBX International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, GBX International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and GBX International

The main advantage of trading using opposite Morgan Stanley and GBX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, GBX International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GBX International will offset losses from the drop in GBX International's long position.

The idea behind Morgan Stanley Direct and GBX International Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.